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June 30, 2009    

HMV profits boosted by collapse of Woolworths and Zavvi

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by Kay Murchie

HMV, the music and games retailer, has benefited from the demise of rivals and posted an 18% increase in full-year profits.

The group said pre-tax profits for the 12 months to April 25 were 11.5% ahead at £63 million. Furthermore, annual group-wide pre-tax profit totalled £61.3 million, compared with the £52 million reported a year ago.

According to the retailer, the collapse of rivals - Woolworths and Zavvi - late last year, has helped it increase its market share and boosted like-for-like sales.

Furthermore, the retailer has also increased the roll-out of its “next-generation” revamped stores and said it is expanding into the fast-growing live music market through a partnership with MAMA Group, the venue operator.

The group said: “We are working hard to maximise both the market share opportunity that has arisen from the withdrawal of competitors, and the investments that have been made over the last two years to improve performance.”

Woolworths, the iconic High Street store, entered administration late last year and finally closed its doors in January. The chain collapsed under a mountain of debt of £385 million and was under severe pressure from competition from large supermarkets and the internet.

Meanwhile, Zavvi, which was created after a management buy out of the Virgin Megastore (division of the Virgin Group) in September 2007, was hit by the collapse of Woolworths, which forced it to cease taking new orders via its website. Woolworths’ unit Entertainment UK (EUK), was Zavvi’s main supplier.

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